Hundreds of years ago, during the Industrial Revolution, workers revolted against the mechanization of their work.
These workers, known as Luddites, had to watch for decades as their industries were converted from labor-intensive to labor-poor production.
The problem for workers was that new technologies, such as cotton spinning, were much more efficient than manual labor.
Machines have largely replaced labor rather than supplemented it.
This provides an important distinction regarding the unfolding boom in artificial intelligence (AI) and its impact on jobs.
The office worker as a weaver
Unlike the industrial revolution of the 19th century, the service sector is most at risk from automation in the AI revolution.
These are the most common economic activities carried out by Australians and they account for 80 percent of the economy.
This is typical of postmodern industrialized countries and has led to estimates that up to 300 million jobs in the field of artificial intelligence will be lost worldwide.
About nine percent of all jobs on earth.
The experience of the industrial revolutions of the 18th and 19th centuries shows that this trend is probably exaggerated, at least in terms of speed.
However, there are reasons to believe that the impact will be significant and unstoppable.
Nothing that could break
The Luddites of the 19th century had an obvious target for their anger: in protest, they attacked the machines that were taking their jobs.
But what can a worker do when his entire production chain becomes a module bolted to an AI backbone somewhere in Silicon Valley?
To achieve supportive policies, workers must protest directly to their government.
These could include, for example, an unconditional basic income, robot taxes or retraining subsidies.
What won’t happen, because it won’t work, are tariffs designed to prevent automation. AI is in the cloud and companies will move jobs to AI-powered jurisdictions.
Australia and AI
AI poses a greater challenge for Australia than for other developed economies.
This is because the structure of our economic growth is different from that of most others.
Typically, developed market economies grow by attracting business investment.
Australia grows by expanding its labor market through immigration and then counteracting declining living standards through public investment.
If AI becomes a material threat to jobs, this model is clearly at risk as foreign workers are increasingly excluded due to political backlash.
A microcosm of this dysfunction is playing out now as the post-Covid economy comes under pressure from rising interest rates and immigration is restricted.
The prospect of weak labor markets colliding with job losses in the AI field makes the model completely unsustainable.
The Australians will not succeed in destroying the machines, but they may succeed in destroying Canberra.
David Llewellyn-Smith is chief strategist at MB Fund and MB Super. David is founder and editor of MacroBusiness and was founder and global economics editor of The Diplomat, the leading geopolitics and economics portal in the Asia Pacific region. He is co-author of The Great Crash of 2008 (with Ross Garnaut) and editor of the second Garnaut Climate Change Review.